Question

On April 1,2018, a Limited Company was incorporated with an authorised capital of Rs 8,00,000 divided into shares of Rs 10 each.

It offered to the public for subscription of 60,000 shares payable as follows:

$\begin{array}{ccc}\text{On Application}& & \text{Rs 3 per share}\\ \text{On Application (May 1,2018)}& & \text{Rs 2 per share}\\ \text{On First and Final Call (One month after allotment)}& & \text{Rs 5 per share}\end{array}$

Public applied for 92,000 shares and the application money was duly received on April 15, 2018.Applications for 2,000 shares were rejected and applicants for 90,000 shares were allotted 60,000 shares.

Give journal entries to record the transactions in the books of the company if:

(i) The amount due has been duly received.

(ii) The company maintains the combined account for application and allotment.

Answer 1

$\text{JOURNAL}$

$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F}& \text{Dr (Rs)}& \text{Cr. (Rs)}\\ 2018& & & & & \\ \text{April 15}& \text{Bank A/c}& \text{Dr.}& & 2,76,000& \\ & \text{To Share Application and Allotment A/c}& & & & 2,76,000\\ & \text{(Application money received on 92,000 shares}& & & & \\ & \text{@ Rs 3 per share)}& & & & \\ \text{May 1}& \text{Share Application and Allotment A/c}& \text{Dr.}& & 3,00,000& \\ & \text{To Share Capital A/c}& & & & 3,00,000\\ & \text{(Transfer of application money @ Rs 3 and}& & & & \\ & \text{allotment money due @ Rs 2 on 60,000 shares)}& & & & \\ \text{May 1}& \text{Share Application and Allotment A/c}& \text{Dr.}& & 6,000& \\ & \text{To Bank A/c}& & & & 6,000\\ & \text{(Application money refunded on rejected}& & & & \\ & \text{applications :2,000 shares @ Rs 3)}& & & & \\ \text{May 1}& \text{Bank A/c}& \text{Dr.}& & 30,000& \\ & \text{To Share Application and Allotment A/c}& & & & 30,000\\ & \text{(Balance of allotment money received)}& & & & \\ \text{June 1}& \text{Bank A/c}& \text{Dr.}& & 3,00,000& \\ & \text{To Share First and Final Call A/c}& & & & 3,00,000\\ & \text{(First and final call money received)}& & & & \\ \text{June 1}& \text{Share First and Final Call A/c}& \text{Dr.}& & 3,00,000& \\ & \text{To Share Capital A/c}& & & & 3,00,000\\ & \text{(First and Final Call transferred to share capital account )}& & & & \end{array}$

Notes:

(1) Only one entry is passed for creditng the Share Capital Account in respect of both the application money and the allotment money.

(2) Entry for surplus application moeny to be adjusted on allotment need not be passed.

(3) $\begin{array}{cccc}& & & \text{Rs.}\\ & \text{Amount due on allotment: 60,000 shares}\times \text{Rs}2& =& 1,20,000\\ & \text{Less: Excess received on application: 30,000 shares}\times \text{Rs}3& =& 90,000\\ & & & \overline{\underset{–}{\underset{–}{30,000}}}\end{array}$

(4) There will be no change in the entries in respect of Calls on Shares.